NC budget boosts school spending, but for fewer students

After two years without a comprehensive state budget, North Carolina lawmakers are poised to enact a spending plan that bumps public education spending even while enrollment in public schools continues to decline.

The $34.4 billion spending plan was finalized over the weekend and is headed for floor votes July 1 and 2. Of that total, roughly $12.5 billion — more than a third — goes to K‑12 public schools through the Department of Public Instruction (DPI), an increase of about $553 million over the level schools had been operating under.

But nearly all of that growth pays for raises, not new students or new classrooms, leaving the state spending more on a smaller student body.

Where the money goes: Raises

Raises for teachers have caught most of the attention. The state’s new teacher salary schedule includes an average increase of about 8%, with a starting base of $48,000 a year before local supplements, at a total price tag of $514.7 million. Budget negotiators say the plan would make the state’s starting teacher pay “No. 1 in the South.”

Other employee groups see smaller bumps: Assistant principals average 6.3%, while principals, central-office staff, and noncertified employees receive a 3% across-the-board raise. Benefits add hundreds of millions more, including $67.4 million for school-district health coverage and $53.4 million for retirement contributions.

Because the raises are not retroactive, the budget bridges the frozen year with one-time bonuses — $500 or $1,000 for teachers based on experience, and $1,750 for school nutrition and custodial workers.

Republican leaders have cast the raises as historic and overdue after the two-year freeze. Democrats counter that they fall short and are outpaced by spending on private-school vouchers. 

“We came to Raleigh and we passed a budget that put more money into private school vouchers than it did into teacher raises,” state Rep. Brandon Lofton, D-Mecklenburg, said earlier this year. Gov. Josh Stein’s own budget had proposed an average 11% raise.

Some who support the raises argue the state should also rethink how it structures teacher pay.

“Competitive pay is essential for recruiting high-quality educators, and that’s reflected in the tremendous sum lawmakers allocated this year for raises,” said Bryce Fiedler, director of the Carolinas Academic Leadership Network. “Moving forward, however, North Carolina should actively explore what can be done with the salary schedule or teacher pay more broadly to encourage our highest-performing professionals to stay in the classroom. The current model rewards years of experience far more than demonstrated effectiveness.”

More money, fewer students

The budget funds an allotted average daily membership of 1,506,908 students for 2026-27 — built on the most recent year’s count, down from 1,526,117 the year before. That decline of roughly 19,000 students, about 1.3%, triggers a $104.6 million reduction as the allotment formula tied to headcount shrinks.

The drop is concentrated entirely in traditional districts, which fell by about 23,900 students, even as public charter schools grew by about 4,700. Enrollment has been sliding for several reasons, including demographics, charter growth, and the expansion of private-school vouchers.

The net effect is that per-pupil spending would rise under the plan, but largely because there are fewer students to divide a raise-driven increase among.

Targeted investments and cuts

Beyond pay, the budget directs money to a set of programs lawmakers describe as proven strategies. It adds $30 million for Advanced Teaching Roles salary supplements and $2 million to expand participation. On math, it funds a $6 million universal screener for low-performing schools, $4 million for Carnegie Learning professional development, and a new statewide K-8 math screening requirement. 

On literacy, the spending plan provides $13.8 million for middle-school professional development and expands the state’s early reading screener into grades four and five.

The budget also funds contracts with education-technology providers, including $2.5 million each for Khan Academy and MagicSchool, and $4 million for automated external defibrillators in schools.

Lawmakers are also making cuts in several areas, however. The proposed budget would eliminate recurring funds for the TeachNC recruitment initiative at about $980,000, the Coding and Mobile App Development grant program at $800,000, and a low-wealth and small-county recruitment bonus at $2 million, while sunsetting the Textbook Commission.

Study to revamp the system

In a move that could eventually reshape school funding altogether, the plan sets aside $300,000 for a work group to develop a strategy to move North Carolina away from its decades-old allotment model toward a weighted student funding formula, with a report due July 15, 2027. 

The group is also directed to study whether the job of disbursing K-12 funds should shift from DPI to the NC State Education Assistance Authority (NCSEAA).

Nothing changes how a dollar flows next year, and lawmakers have floated the idea before without acting. But supporters say the current system is overdue for an overhaul. 

“We’re one of just a few states with a resource-based allocation method,” Sen. Michael Lee, R-New Hanover, said when the proposal advanced as a standalone bill this spring. “The transparency, the accountability, and the ability to properly fund education is going to be determined by a weighted student formula.”

The disbursement study drew a constitutional objection from Sen. Sophia Chitlik, D-Durham, who questioned whether routing K-12 funds through NCSEAA conflicts with the State Board of Education’s authority over public schools.

The budget heads to the floor this week. If it passes, Stein will have 10 days to sign it, veto it, or let it become law.

Stein said on June 30 that he would be reviewing the plan “incredibly closely in the coming days.”

“What we want is for the state to pass a budget that invests in our people, and by that I mean making sure that our young people get the knowledge that they need in our K-12 schools, so that they can choose to have a great career or continue on to college,” Stein said.

“NC budget boosts school spending, but for fewer students” was originally published on www.carolinajournal.com.